VELO delivered a textbook earnings surprise — and the market loved it. The stock has climbed 40% over the past month to $14.06, buoyed by a Q1 double beat and a reiterated full-year revenue outlook of $60–70M. But short sellers aren't folding. Short interest jumped nearly 7% in a single week even as the price rallied, and with SI still at 31% of the free float, the post-earnings euphoria and the bear conviction are running on a direct collision course.
The positioning data tells a split story. Short interest has declined sharply from its April peaks — it topped out near 40% of the free float on April 23 when borrow was at its tightest — but the past week saw an abrupt rebuild, with estimated short shares rising from 3.2M on May 8 to 3.64M by May 12. Borrow costs have eased considerably, dropping from a peak above 22% in late April to 6.1% now, the lowest in over six weeks. Availability has opened up too, running at 63% of SI compared to less than 10% at the late-April squeeze peak. That loosening of the lending market has made it cheaper and easier for fresh shorts to enter — and the week's data suggests some are doing exactly that. The ORTEX short score remains elevated at 71.4, reflecting persistent bearish positioning even as the fundamental story improves.
Options traders, in contrast, are leaning bullish. The put/call ratio has been trending steadily lower over the past two weeks, falling to 0.33 on May 12, well below its 20-day average of 0.36. That's near the lower end of the past year's range, indicating calls are dominating flow. Options buyers appear to be chasing the rally rather than hedging against a reversal, a posture that stands in direct contrast to the short sellers adding to positions.
The Street is cautiously constructive. Lake Street's Jaeson Schmidt raised his price target from $18 to $20 on May 13, maintaining his Buy rating. He is the sole covering analyst on record, and his target of $20 sits well above the current $14.06. The company's reiterated guidance — $60–70M in 2026 revenue with gross margins targeting above 30% in the second half — gives the bull case a concrete pillar. The ORTEX factor scores are mixed: the short score ranks in the bottom 3rd percentile (meaning it is among the most shorted names in the universe), but the sector score is neutral at 50. Borrow availability ranks in the bottom 6th percentile, underscoring how structurally crowded the short side has been.
Ownership is unusually concentrated. Arrayed Additive Inc. holds 42.8% of shares, a near-majority stake that heavily constrains the freely tradeable float. AWM Investment Company added 238,000 shares in Q1, lifting its position to 5.7% of shares. Thieneman Construction disclosed a fresh stake of 1.15M shares. That level of concentration means the effective float is much smaller than the headline share count implies — a factor that amplifies both squeeze dynamics and downside volatility. The 18% single-day gain recorded on May 8 following the earnings release underlines how quickly this stock can move when short pressure collides with thin tradeable supply.
The next earnings date is June 10. Between now and then, the key dynamic to watch is whether borrow costs begin creeping back up as the new short positions accumulate — and whether the loosening availability that enabled this week's rebuild starts to reverse, bringing the lending market back toward the tighter conditions seen through most of April.
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